MWM's power-panel agree workforce and speed-to-market are top industrial drivers. Here's what else the panel had to say at last week's MWM Industrial Summit:
Elli Bowen, Vice President Business Development, KC SmartPort
“More and more of our clients are coming to us with only one thing in mind at the beginning of the site selection process – workforce. They’re not interested in discussing real estate or the specific specs of the project. They provide us with their top ten job categories and want us to provide in-depth analysis on market wages, turnover rates and what’s increasing/reducing them, supply and demand numbers and more.
“They want a full picture of today’s labor force - their skill sets, where they’re coming from and how far they’re willing to travel – and proof that as a region, we’re doing what’s needed to ensure the future pipeline of talent is substantial and relevant to industry needs. Truly, workforce is the number one factor driving every industrial deal we’re touching now.”
Aaron Schlagel, Vice President of Real Estate Development, Ryan Companies
“We are running construction crews around the clock to meet the demand we have for industrial properties. As tenant requirements become more specialized, development and construction teams like Ryan are able to move exceptionally fast to meet these demands.”
“If you want to talk about one thing that can change our entire industry, particularly in a region that’s spread out like we are, it would be autonomous vehicles. You start removing the cost of surface parking lots, the cost of structured parking in a market like ours, it has a significant impact on everything we’re doing. I know that this region has a lot of different opinions on it, but autonomous vehicles are coming.”
Joe Oliaro, Managing Director, Newmark Grubb Zimmer
“Prologis recently did a study comparing costs within the supply chain. The study showed that real estate only accounts for approximately 5% of total costs across the supply chain, whereas transportation (45-55%) and labor (25-30%) makes up the vast majority of costs. In other words, a 1% savings in labor and transportation equates to a ~15% spend in logistics real estate. So, as costs for labor and transportation get more scarce and competitive, companies will begin to justify increased real estate/occupancy costs where they can realize greater savings. Real estate is very much the tail wagging the dog, but also creates an opportunity for markets where property, highways and people intersect.”
“For every billion dollar increase in online sales, you need to have 1.25 million square feet to support that growth. E-commerce in 2018 was $517 billion which was a $77 billion increase over 2017. That’s 96 million square feet that needs to come onto the market to support that kind of growth.”
“I have a client who has been looking for a fleet mechanic for the last 6 months and they can’t get anyone to apply because all the fleet mechanics are working somewhere. As soon as they come on the market, they’re snatched up. The average age of a truck driver is 55 years old. We’ve got to step it up as a region to give incentives to younger folks to get into training programs to get their CDLs; to get into training programs where they are becoming skilled labor.”
“When you talk about e-commerce fulfilment space, the density increases drastically. You’re looking at 70 to 80% more employees per 1000 square feet of fulfilment space. As e-commerce continues to grow, that demand is only going to continue to increase. It’s a big deal and something we need to address.”
Brian Smith, President/CEO, Wagner Logistics
“We have fairly decent labor laws and a pretty good source of labor. It’s tight now, but it’s tight everywhere across the country. We have space, unlike the east coast or the west coast. And, we have the open land to build which drives some of that growth. I think all those factors contribute to companies choosing this location. Lastly, if you’ve ever looked at a parcel map, you can ship a lot of stuff from the Kansas City area and it will get there the next day without paying for the next day rates.”
“Who bought anything online in the year 2000? Nobody did. But they do today. Maybe you bought from a catalog in 2000 and you expected to get it in two weeks. Now you buy something online and you expect to get it tomorrow or maybe you expect to get it today. Obviously, that has sped up our supply chain.”
“Kansas City is no worse than any other market so far as the labor force is concerned. We can usually find people. We’re not struggling with that part. We can usually find people to come in and work. The key is to keep them. There’s a lot of turnover in the first year of employment. We’re doing all kinds of things I never thought we’d do with people walking in the door—we’re trying to change the environment.”
Austin Baier, Vice President, CBRE
“We’re lucky to have some good [industrial growth] drivers here. We have e-commerce, we have great UPS and FedEx around them, we also have two of the best-selling Ford vehicles with the Transit and the F-150 and having GM in town. Those are big drivers that are bringing people to Kansas City. Between Ford and GM, we get a lot of 3PLs (third-party logistics) that are coming to Kansas City to service them. That creates a lot of demand for the market.”
“I think last year 60% of the deals that were done in new buildings were by parties new to Kansas City. So they’re coming to Kansas City and the first conversation they are having is: What are the statistics here for labor? That’s the key—how do we get them to Kansas City and show them we have good labor.”
Mike Kellam, VP Business Development, McClure
“The topic of the decade is workforce. I think that is a key point in the location of these facilities because you have to have people be able to get there and be able to work. We constantly struggle with folks filling these jobs and then not being there regularly for transportation or other reasons. I think there’s going to be a demand for determining sites within the 435 loop or closer to the center just from the simple fact of the workforce but also what we look at a lot is the challenges of development and utilities.”
“I think it’s important to take stock in where we have redevelopment sites too. There’s a lot of opportunity, greater capitalization on the use of waterways and those types of things. There are a lot of interior sites being looked at and that’s what really intrigues me from an industrial manufacturing perspective because when you start to look at those sites, you’ve got a workforce ready site, where you’ve got people living in and around so that takes care of that transportation issue. It makes it easier, it creates a little bit more of a community. You might see a return to that.”
